US Dollar Dips as Fed Policymakers Play Down Last Week’s Hawkish Tones

US Dollar Dips as Fed

US Dollar Dips as Fed, The US dollar is trading mostly steady into Tuesday after experiencing a steep decline in the previous session, which pulled it down from the highest levels seen in 19 months on the back; of cautious comments from Fed policymakers. At the time of writing, the US dollar index DXY is trading around 96.51.

The greenback slipped under; the 96 mark against other major currencies after; several Fed policymakers cautioned against aggressive tightening of the monetary policy. The uncertainties surrounding inflation and the economic impact of the pandemic have clouded the possibility of further dovish moves after the first rate hike coming; up in March.

The comments highlighted a mood of ‘wait and watch’ after the first rate hike; tempering market expectations for a 50bp rate hike coming next month. Policymakers stress that they need more clarity on inflation as well as economic recovery from the pandemic before confirming additional plans towards monetary tightening, reversing some of the strongly dovish outlook put out after last week’s FOMC.

US Dollar Dips as Fed, Meanwhile, AUD/USD has bounced back above the 0.70 level on account of the; weakness in the US dollar and the RBA’s decision to end its bond buying program. At its latest policy meeting, Australia’s central bank decided to keep rates unchanged but announced that it will cease bond buying from February 10.

While volatility may remain lower in financial; markets due to the Chinese New Year holidays, the US dollar could experience some movement towards the end of the week; on the release of January’s NFP report. According to a recent poll by Reuters, economists expect the US economy to have seen an addition; of 153k jobs in January, lower than December’s 199k reading, while the unemployment rate could hold steady at 3.9%.


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